President of Cyprus Criticizes Bank Chief

President Nicos Anastasiades did not say what the central bank governor, Panicos O. Demetriades, had done to draw his ire. But he suggested that Mr. Demetriades’s actions had led to the resignations on Friday of three central bank board members.

Mr. Demetriades, an appointee of the previous left-wing administration, told the Cypriot newspaper Phileleftheros that his cooperation with the government and Parliament was a given in order to deal with the country’s severe financial crisis, but that the central bank’s independence must be respected.

Lawmakers have criticized Mr. Demetriades over his role in talks with the country’s euro zone partners and the International Monetary Fund, which culminated in a 23 billion euro ($30 billion) rescue package.

The terms of the bailout require Cyprus to raise 13 billion euros of the overall amount by imposing losses on deposits over 100,000 euros in the country’s two largest banks, Bank of Cyprus and Laiki.

Laiki experienced heavier losses from bad Greek debt and loans than the larger Bank of Cyprus. Laiki will be broken up in to a “good” bank that will be folded into Bank of Cyprus and a “bad” bank that will be wound down.

As part of its bank restructuring, and to prevent a run on its banks, Cypriot authorities have imposed a series of capital controls — the first that any country has applied in the euro zone’s 14-year history — including a daily 300 euro limit on withdrawals.

Officials said the restrictions would be lifted gradually until trust in banks is restored. On Sunday, the authorities raised the monthly domestic bank-to-bank transfer limit for individuals to 50,000 euros from 10,000 euros. For businesses, the transfer limit rose to 300,000 euros from 50,000 euros, but documents justifying the transfer must be presented.

Article source: http://www.nytimes.com/2013/04/15/business/global/president-of-cyprus-criticizes-bank-chief.html?partner=rss&emc=rss